Event: the company released a semi-annual report on 2022, with operating income of 2.671 billion yuan in the first half of 2022, an increase of 12.98% over the same period last year, and a net profit of 341 million yuan,-32.14% compared with the same period last year. Net profit after deducting non-recurring profits and losses was 418 million yuan, down 8.71% from the same period last year. In 2022, Q2 realized operating income of 1.522 billion yuan, an increase of 6.16% over the same period last year, an increase of 32.47% over the previous year, a net profit of 307 million yuan, a decrease of 16.63%, an increase of 803.00% over the previous year, and a net profit of 293 million yuan after deducting non-recurrent profits and losses, a decrease of 8.43% over the same period last year and an increase of 134.42%.
The marginal improvement of supply and demand of 2022Q2 graphite electrodes and the continuous improvement of industry profits: according to Baichuan Yingfu data, the output of graphite electrodes in China from April to June was 237500 tons,-12.33% compared with the same period last year, and the average operating rate of 85 household appliance furnace steel monitored by Mysteel in April-June was 67.63%,-14.87% year-on-year, and + 23.43%, indicating the marginal improvement of supply and demand in the graphite electrode industry in the second quarter. According to Baichuan Yingfu data, the average price of 2022Q2 graphite electrode is 24713 yuan / ton, with a month-on-month ratio of + 16.80%, an industry gross profit of-884 yuan / ton, and a month-on-month ratio of + 654 yuan / ton.
The operating rate of electric furnace fell from July to August in 2022, and the profits of the graphite electrode industry weakened: the average operating rate of 85 household appliance furnace steel monitored by Mysteel in July-August was 50.03%, with a month-on-month ratio of-17.59%; according to Baichuan Yingfu data, the price of graphite electrode in July-August was 23044 yuan / ton, the month-on-month ratio was-6.75%, the gross profit of the graphite electrode industry was-1660 yuan / ton, and the loss was further expanded by 776 yuan / ton.
In order to meet the needs of the company's international business development, it is proposed to issue global depositary receipts: the company plans to issue global depositary receipts on the Swiss Stock Exchange (hereinafter referred to as GDR). The maximum number of GDR issued by the company during the period of existence shall be calculated and determined according to the conversion rate of A shares between GDR and underlying securities determined before issuance and the number of A shares as GDR underlying securities. The number of the aforementioned A shares shall not exceed 15% of the total share capital of the common shares before the completion of this offering and listing of the company, that is, 571 million shares.
Fangda Group issued 3 billion yuan of negotiable bonds to enter the stock conversion period: on November 5, 2021, Fangda Group issued 3 billion yuan of negotiable bonds based on the company's shares, with a maturity of 3 years and a coupon rate of 3.50%. The convertible bonds will enter the stock conversion period from May 10, 2022, and the stock conversion period will end on November 5, 2024.
Profit forecast, valuation and rating: affected by the decline in the operating rate of electric furnace steel, the profitability of the graphite electrode industry has weakened. We have lowered the company's 2022-2024 net profit forecast by 33.17%, 37.33% and 37.08% to 1.189 billion yuan, 1.633 billion yuan and 2.131 billion yuan, respectively. Under the background of the "double carbon" policy, the prosperity of the graphite electrode industry is expected to pick up significantly. And the company as an industry leader with carbon new materials business, to provide new momentum for future development, follow-up profits are expected to continue to pick up, so to maintain the company's "buy" rating.
Risk hints: overcapacity of products such as graphite electrode industry and isostatic graphite leads to a decline in profitability; Fangda Group issues negotiable bonds based on the company's shares, which may affect the company's stock price on a large scale in the future.